Petrol is cheaper by Rs 6.45 a litre and diesel by Rs 4.42 a litre since October 17 when the current price decline trend started.

Commodity Summary

MCX

Domestic fuel prices are set to fall further with crude oil slipping below $63 a barrel, down from a four-year high of $86 in October, on increased worries about global economic growth prospects and building up of a supply glut.

Petrol is cheaper by Rs 6.45 a litre and diesel by Rs 4.42 a litre since October 17 when the current price decline trend started. On Wednesday, petrol was priced at Rs 76.38 and diesel Rs 71.27 a litre in Delhi.

Prices can fall further sharply if state oil companies pass on the full benefit of a collapse in crude oil, which is down to $63 a barrel from a little more than $86 a barrel on October 3. Fuel rates largely follow the crude price trend but are also influenced by their respective demand-supply situation.

Local rates of petrol and diesel are theoretically determined daily by factoring in the trailing 15-day average of international fuel prices and the exchange rate. But local prices do not always strictly follow the international trend as an opaque pricing process allows state oil companies to moderate prices by raising or cutting less than the required, sometimes at the direction of the government.

Crude oil has been sliding due to fears of a supply glut building up and darkening demand prospects. Increased supplies from the United States, Russia and Saudi Arabia have stoked supply glut fears, and reignited talks among OPEC members and allies of cutting production months after they ended previous cut to raise supplies.